[NewsSpace=JeongYoungKim] LG Energy Solution is investing over 7 trillion won(KRW) to dominate the rapidly growing North American market. The company plans to produce cylindrical batteries and ESS (energy storage system) LFP batteries, and Tesla is being considered as a likely major customer for the cylindrical batteries, which are used extensively by the company.

On March 24th, LG Energy Solution announced that it will invest 7.2 trillion won(KRW) to build a new cylindrical and ESS LFP battery plant in Queen Creek, Arizona, USA. The total production capacity of the plant will be 43 GWh, which is the largest capacity among global battery production plants located in North America.

LG Energy Solution has decided to resume the construction of the Arizona cylindrical battery plant, which was put on hold in June 2020 for review by the board of directors. The company has also decided to significantly expand the investment amount and production capacity to 4.2 trillion won(KRW) and 27 GWh, respectively.

In addition, the company will invest an additional 3 trillion won(KRW) on the same site to build a separate ESS LFP battery production plant with a total capacity of 16 GWh. Building an ESS-only battery production plant is the first of its kind among global battery companies.

According to LG Energy Solution, "customer demand for a stable supply of high-quality and high-performance batteries within the North American region has increased significantly due to the implementation of the Inflation Reduction Act (IRA)," and "we have decided to significantly expand our planned investment to proactively respond to customer and market demands."

 

■ To aim to target the high-growth North American market by investing 4.2 trillion won(KRW) in a new cylindrical battery production plant.

LG Energy Solution plans to begin construction of a new cylindrical battery production plant, with a budget of 4.2 trillion won(KRW), targeting completion and mass production by 2025. The plant will produce the flagship 2170 cylindrical battery model and supply it to major US electric vehicle customers.

Among domestic battery companies, LG Energy Solution is the first to construct a cylindrical battery dedicated production plant within the North American region. The plant is expected to have an annual production capacity of 27GWh, which is equivalent to producing 350,000 high-performance pure electric vehicles per year.

The plan is to lead the cylindrical battery market, which is expected to have steep growth, and to strengthen the position as the world's leading battery company. The global cylindrical battery market is expected to double from its size of 36.8 trillion won(KRW) last year to 70.2 trillion won(KRW) in 2026.

LG Energy Solution stated, "As more companies in North America, especially electric vehicle startups, are adopting cylindrical batteries, the market is rapidly growing," and "through this investment, we will supply our customers with high-quality products in a stable manner."

■ A definite top position in the North American market with the world's first ESS-dedicated factory with a budget of three trillion won(KRW)

LG Energy Solution has announced plans to build the world's first energy storage system (ESS) battery production plant in the United States. The company will invest 3 trillion won to build the plant, which will produce pouch-type lithium-iron phosphate (LFP) batteries for ESS applications with a total capacity of 16 GWh. This investment is a significant expansion of LG Energy Solution's original plan to build an 11 GWh cylindrical battery plant in Arizona. Construction of the new plant is expected to begin later this year, with mass production targeted for 2026.

The ESS market is expected to grow rapidly worldwide as countries expand their support for renewable energy policies, with the North American market expected to lead the way. According to SNE Research, the North American ESS market is expected to grow more than tenfold from 14.1 GWh in 2021 to 159.2 GWh in 2030. LG Energy Solution's ESS batteries and systems have several advantages over competitors in terms of energy density, state-of-charge precision, and local production to reduce logistics and customs costs, thus ensuring price competitiveness.

In addition, LG Energy Solution has a subsidiary in the United States, LG Energy Solution Vertech Inc, which provides ESS supply, business planning, design, installation, maintenance, and other services. With these capabilities, LG Energy Solution plans to strengthen its customer portfolio and expand high-profit business models based on data services, securing its position as the leader in the North American market.

■ To achieve overwhelming dominance in the North American market with  differentiated production capabilities and a diverse product portfolio"

LG Energy Solution plans to dominate the North American market with its differentiated production capabilities and product portfolio through its new factory in Arizona. With this new factory, LG Energy Solution will have a total of seven production bases in the North American region. Currently, they operate a factory in Michigan and a joint venture factory with GM in Ohio. They are also building two factories with GM in Tennessee and Michigan, respectively, as well as a battery production factory in collaboration with Honda in Ohio and a joint venture factory with Stellantis in Ontario, Canada.

In addition, LG Energy Solution plans to diversify its product portfolio even further, expanding beyond electric vehicle (EV) pouch and cylindrical batteries to include LFP batteries for energy storage systems (ESS). With the most diverse product portfolio among North American battery companies, LG Energy Solution aims to solidify its position in the rapidly growing EV and ESS market.

LG Energy Solution CEO Kwon Young-soo said, "The Arizona factory construction will be a great opportunity to firmly establish our position in the rapidly growing North American EV and ESS markets." He also added, "We will strengthen our global production capabilities and unique product competitiveness to provide the world's best customer value."